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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

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Denisse Guerrero: Capital gains tax helps right wrongs of state code

Denisse Guerrero

By Denisse Guerrero

Nine people in Olympia have the opportunity to make Washington’s tax code a little more equitable for hundreds of thousands of families of color across Washington.

Last year, Washington lawmakers passed a tax on the extraordinary capital gains profits of a small handful of super-rich Washingtonians – which poll after poll shows Washington voters support. Like clockwork, that same group of wealthy elites filed a lawsuit to give themselves a tax break, which is before the Washington State Supreme Court.

The tax on capital gains profits is almost exclusively paid by millionaires and billionaires. The tax completely exempts retirement accounts, and the sale of homes and family-owned small businesses, truly taxing only individuals who make massive amounts of money by simply already having massive amounts of money.

The court’s impending decision means more than upholding a tax on the rich – which would almost entirely be paid by millionaires in King and Snohomish counties – it also means upholding a small but meaningful step in making our tax code more equitable for people and families of color. And it means protecting funding to increase child care openings here in Spokane County, which has faced a child care shortage crisis since before the pandemic. That’s right, this tax primary paid by rich King County investors will help Spokane parents.

As a resident of Spokane, I have seen how this will help families across Eastern and central Washington, including my own family. My siblings say finding affordable child care for their new children is nearly impossible. As someone who is planning to have children, that’s already a stressor for me. I’m hopeful that the Washington state Supreme Court will soon uphold this tax, sending nearly $500 million a year to expand child care, preschool and other education opportunities. If so, we could see more child care openings in Spokane as soon as next year.

But that’s not the only reason the court should uphold this tax on the super rich. Washington has long had the distinctive dishonor of the most upside-down tax code in the country, where our lowest-income residents pay up to six times more of their income in state and local taxes than the wealthiest.

Washington’s tax code is unfair by design. People are taxed every time they buy necessities, or new school clothes, or new tires for the car, throwing up even more barriers for lower- or midincome BIPOC families while a handful of wealthy, mostly white households accrue wealth and assets at an ever-increasing, ever-untaxed velocity.

This isn’t just a deeply flawed tax structure that overburdens BIPOC families like mine. It’s bad for our entire economy, because our economy is strongest when we include the most people in it. When families have less money to spend, businesses have fewer customers and hire fewer people. When more people have more money to spend, businesses make more and hire more people. At a certain point, rich people aren’t going to buy more stuff, and hoarding money in hedge funds and fine art doesn’t contribute to our economy.

In shifting tax responsibilities a little by taxing the capital gains profits of the rich, combined with policies like the Working Families Tax Credit, we begin to address decades of racist policies and tax laws to make our tax code more equitable. Additionally, the revenue from capital gains profits goes toward making child care and early learning more affordable for lower-income families, meaningful investments that will benefit those who have been most harmed by our upside-down tax code.

Just as Washington’s inequitable tax code is the result of intentional policy choices, it’s going to require intentional policy choices to undo. The tax on capital gains profits is a good start, and our state Supreme Court should uphold it and reject this attempt by Washington’s wealthy elite to protect their profits at the expense of everyone else.

Denisse Guerrero is membership and policy manager for Washington Community Alliance. She lives in Spokane.